Embrace adversity to develop character and leadership

Minneapolis, Minnesota


"Crisis takes many forms," said Bill George, "and crisis is the real test and making of a leader."


Authentic leadership has been a cause of George's life since stepping down as chair and CEO of Minnesota-based Medtronic. The current professor of management practice at Harvard Business School has authored three best-selling books, including his most recent, "7 Lessons for Leading in Crisis." He serves currently as a director of Exxon Mobil and Goldman Sachs, and served formerly on the boards of Novartis and Target Corporation.


George convened and moderated a "Summit on Leading in Crisis: Personal stories from the trenches," Sept. 17, at the Ted Mann Concert Hall at the University of Minnesota-Minneapolis. The four panel members included John Donahoe, chair and CEO, eBay; David Gergen, CNN commentator and Director, Center for Public Leadership, Harvard Kennedy School; Anne Mulcahy, chair and former CEO, Xerox; and Marilyn Carlson Nelson, chair and former CEO, Carlson Companies.


In opening remarks, George said that leaders need a willingness to show vulnerability and weakness, and the ability to face reality, particularly in times of crisis. He observed that "the Chinese character for crisis has two parts, representing danger and opportunity."


Mulcahy learned about all of that when she became CEO of Xerox in 2001, a time when the company was billions of dollars in debt, embroiled in an SEC scandal, and faced Chapter 11 bankruptcy. "It was important," she said, "that I understood how serious the problems were and that I let people know it." When she told investors on a conference call that Xerox's business model was "unsustainable" the stock price dropped 45% overnight. "It was the truth and the right thing to say," Mulcahy said, "but it was painful."


She spent her first three months as CEO traveling the globe, listening to Xerox employees and customers and spreading optimism. "The organization doesn't move if people don't believe," she said. "The way to get results is by engaging our customers and our people, and we had to devise a set of actions that people could understand and believe in."


Gergen has served in the administrations of four U. S. presidents during his career (Nixon, Ford, Reagan, and Clinton), and observed that the public sector deals well with crisis because people come together, particularly when there is preparation. New York City and its mayor, Rudy Giuliani, were ready to handle the terrorist attacks of 9/11, Gergen said, because they had studied and prepared after the 1993 bombing of the World Trade Center, and because Giuliani had read about how Winston Churchill rallied Britain's people during World War II.


Similarly, Gergen said, the handling of the 2008 financial meltdown by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson worked as well as it did because both men were students of the Great Depression. "Intellectual preparation has a lot of value," he said.


The hardest crisis for government, according to Gergen, is the one that lives over the horizon. "It is easy to pander to popular taste, and hard to have courage to summon the will to deal now with looming crises. Great societies and great leaders figure out how to deal with big questions."


A test for Nelson began on the morning of 9/11 when she arrived at the headquarters of Carlson Companies whose 180,000 employees engage globally in the travel and hospitality industry. "It was difficult but easy," she said. "It was a command and control moment. All that had gone before made us successful. We had hired to value and had taught our credo. We simply had to give our people the power to lead within the context of our values when we could not communicate with them." The company's people even took care of its competitors' customers.


Donahoe readily admitted that "I make a lot of mistakes." The past 18 months have been a time of crisis for the 25 million people who sell on eBay, and for the 1.3 million who make their living through the company. However, crisis presented his company with the opportunity to make changes in its business model and become more customer driven. "Still," he said, "when I announced the changes and said it would take three years for them to be effective, our stock price dropped by half."


Nelson observed that many business models may have to change, and voiced concern that "we will have a chronic job crisis over time. A lot of businesses are doing triage. It is not a romantic time."


The question of how to get people back to work will be, according to Donahoe, a test of what America is all about. "In the last 15 years, 70% of all job creation happened in small business. Large businesses are not going to create new jobs in large numbers."


Nelson agreed, but said small businesses need large businesses for distribution. She also noted that small businesses need banks and venture capitalists to make loans to get them to the next level. "We need to get financing moving," she said.


Mulcahy argued for more long term investment, particularly in research and development. "Leadership is needed to drive it."


A question from George asking how each had survived and maintained their personal resilience during crisis was met by a long silence, broken by Mulcahy. "Your people inspire you in ugly times," she said. "Crisis makes you step up to the plate and accept accountability to not let them down. Every night, I asked myself the question, 'Did you do everything you could today?'"


All four panel members believe in the value of crisis and adversity in building character and leadership. "A sense of entitlement doesn't cut it," said Donahoe. "Adversity builds character."


Gergen, who worked in the White House during the Watergate scandal of the Nixon administration, said it is important for young people to get into the arena and be tested early. "That was a long ordeal. We were told one reality within the White House, and another was coming to us from investigations and newspaper reporting. It is very important to have an ongoing set of bonding. You find out who your friends are – and aren't. After many Republican friends stopped calling, it was my Democratic friends who called to check-in. You become acutely aware of the anchors in your life. If you have mountain top experiences, it is important to have been in the valleys in order to appreciate the mountain top. After the valleys, you are ready to take anything on. Fear is gone."


Nelson believes in the anchors of faith and family. Living through the crucible of losing a child in an auto accident provided perspective. She learned that "as long as you have breath there is opportunity to recover. Adversity gives young people the sense that they will survive."


Donahoe concurred. "Once you have been in a valley," he said, "you know you can survive everything – and know that there are other valleys coming."


Mulcahy responded to a question from the audience asking what kind of leadership would change the country's discourse. "One person cannot do it alone," she said. "All the branches of government are responsible for bringing the country together and demonstrating better leadership to the American people."


Nelson added that "We become afraid with a scarcity mentality. We can ask leaders to lead, but we have to engage with them and not just shout at them out of anger."


Gergen worries about violence and governability, citing a deteriorating situation. "When every issue turns bitter and divisive, it becomes very hard to remain a great country. Will the U.S. still be at the world table 20 years from now?"


"This rancid environment is not good," Gergen continued. "What is said in churches, synagogues, city government, and the press is important. We are 'allowing' manufactured controversies. As the president said on 60 Minutes last week, we have to find ways to make civility interesting."


To a question about executive compensation, Nelson answered that corporate boards need to engage the issue. She said she worries about legislating and regulating but recognizes that there are unsustainable compensation models. "People need to be compensated if they add sustainable value."


Mulcahy added that boards are stepping up, and need to focus on performance metrics that are aligned with long term good.


A 13-year-old boy from Eagan, Minnesota, asked what lessons the panel had learned from their biggest crisis when they were his age.


Nelson replied, "Take yourself seriously as an actor. Whether you are 12 or 75, you can make change happen."


Mulcahy said, "Build followership. Leadership has to be earned and not taken for granted."


Gergen advised, "Don't give up if she turns you down for the third time."


Donahoe learned that one must embrace adversity. "It builds character. In it are the gems of life that make leaders."


Approximately 700 people attended "Leading in Crisis." Minnesota Public Radio and Twin Cities Public Television recorded the conversation for future broadcast. Sponsors of the event included Target, Fredrikson & Byron, P. A., George Family Foundation, and Minneapolis-St. Paul Business Journal.

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